Exhibit 99.1
FOR IMMEDIATE RELEASE
Investor Relations Contact: | | Media Contact: |
Terry Slavin | | Meggan Powers |
Director, Corp. Communications & IR | | PR Manager |
Cymer, Inc. | | Cymer, Inc. |
(858) 385-5232 | | (858) 385-6327 |
tslavin@cymer.com | | mpowers@cymer.com |
CYMER REPORTS SECOND QUARTER 2005 OPERATING RESULTS
SAN DIEGO, Calif., July 19, 2005 - Cymer, Inc. (Nasdaq NM: CYMI), the world’s leading supplier of deep ultraviolet (DUV) light sources used in semiconductor manufacturing, today announced operating results for the second quarter ended June 30, 2005. Second quarter total revenue and gross margin exceeded Cymer’s April 19, 2005 guidance. Highlights of the second quarter included higher than expected non-systems revenue, as well as generation of $34,479,000 in cash from operations, and the successful execution of the company’s stock and convertible note repurchase programs. Additionally, Cymer announced earlier today the formation of the TCZ joint venture with Carl Zeiss SMT, AG, to provide production tools to the flat panel display manufacturing industry.
For the second quarter of 2005, net income totaled $11,015,000, equal to $0.30 per share (diluted), compared to net income of $10,201,000, equal to $0.27 per share (diluted), in the second quarter of 2004, and to net income of $5,385,000, equal to $0.14 per share (diluted), in the first quarter of 2005.
Total revenue for the second quarter of 2005 rose to $96,392,000 compared to total revenue of $94,907,000 posted in the second quarter of 2004, and increased 14 percent sequentially over $84,810,000 in total revenue in the first quarter of 2005.
For the first six months of 2005, net income totaled $16,400,000, equal to earnings of $0.45 per share (diluted) compared to net income of $17,357,000, equal to earnings of $0.46 per share (diluted), in the first six months of 2004. Total revenue for the first six months of 2005 was $181,202,000, compared to $182,828,000 in total revenue recorded in the first six months of 2004.
Other Income (Expense) in the second quarter and first half of 2005 was positively impacted by a gain on debt extinguishment of $2,220,000 related to the repurchase of approximately $60 million of the company’s convertible subordinated notes during the second quarter of 2005. On a net income basis, the gain amounted to approximately $0.06 per share (diluted) for the second quarter.
Commenting on the second quarter, Bob Akins, Cymer’s chief executive officer, said, “We are pleased that second quarter 2005 operating results came in ahead of our expectations, and with the continuing robust acceptance of our product offerings. Our market leadership position at 193 nm continued with strong shipments of our XL Series products in the quarter – a total of 26 systems. We received multiple purchase orders for the XLA 200, our third generation dual chamber MOPA ArF light source, and received our first purchase orders for the XLA 300, the fourth generation in this product line that we introduced last week at SEMICON West, and which is scheduled to begin shipping in the final quarter of this year.
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“We recognized revenue on 56 light sources in the second quarter of 2005 compared to 48 light sources in the first quarter of this year,” Akins continued. “Cymer installed 77 new light sources in the second quarter compared to 67 light sources in the first quarter of 2005.
“With chipmakers focused on filling out 90nm production lines and preparing for the ramp up of 65nm production which will occur in 2006 or 2007 for most manufacturers, technology buys remained the main driver of system demand in the second quarter. Our second quarter average selling price (ASP) was $941,000 on a currency adjusted basis,” Akins stated. “The quarterly average utilization of our light sources at chipmakers in the second quarter increased nearly 5 percent over the previous quarter’s average utilization, and drove non-systems product revenue, which consists of consumables and spare parts, upgrades, and service, to $41,000,000, for the second quarter, equal to 43 percent of total revenue.”
Nancy Baker, Cymer’s chief financial officer, stated, “Product gross margin in the second quarter of 2005 was 40 percent compared to 37 percent in the first quarter of 2005. Cymer recorded operating income of $8,925,000, or 9 percent of revenue in the second quarter of 2005, compared to operating income of $5,077,000, or 6 percent of revenue, in the first quarter of 2005,” Baker continued. “Second quarter 2005 bookings totaled $96,368,000, resulting in a second quarter 2005 book-to-bill ratio of 1.0. The 2005 second quarter-end backlog totaled $75,751,000.”
Cymer generated $34,479,000 in cash from operations in the second quarter of 2005 compared to $44,473,000 in the first quarter of 2005, and cash generated from operations in the first six months of 2005 totaled $78,952,000. Cash and cash equivalents and short- and long-term investments totaled $342,332,000 at June 30, 2005.
Baker stated, “Capital spending for the second quarter of 2005 totaled $2,669,000 compared to $5,180,000 in the first quarter of 2005. Our free cash flow for the second quarter, calculated as the net cash provided by operating activities less our acquisition of property and equipment, was $31,810,000, and for the first six months of 2005, free cash flow totaled $71,103,000. In addition to our repurchase of approximately $60 million worth of our convertible notes during the second quarter, we also repurchased approximately 1.7 million shares of Cymer’s common stock in the open market for a total of approximately $41.7 million.”
Corporate Outlook
Commenting on Cymer’s outlook, Akins noted, “At SEMICON West last week, the overall tone of the show was mixed, with some equipment companies indicating that their business had leveled off and that they expected orders to improve late this year. Though chipmakers for the most part continue to make strategic purchases for their 300mm fabs to fill out their 90nm production lines, and prepare for the coming transition to the 65nm node, certain segments have slowed as they install equipment ordered in recent quarters. Specific to Cymer, while the second quarter pickup in our light source utilization rates is encouraging, until overall fab utilization increases from its current level in the high 80 percent range and is sustained at levels well above 90 percent we would expect business to remain at or near its current levels.”
Based on information available at this time, Cymer is currently providing the following guidance for the third quarter of 2005, which includes expectations for the financial impact of the recently announced joint venture:
• We currently estimate that total product revenue in the third quarter of 2005 should be flat to down approximately five percent compared to second quarter 2005 revenue.
• We are forecasting that foreign currency adjusted ASPs should be approximately $940,000.
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• We expect that gross margin should be between 38 and 40 percent.
• We anticipate that R&D expenses should be between $16.5 million and $17.5 million.
• We expect SG&A expenses to be between $13.0 million and $13.5 million.
• We currently estimate the third quarter 2005 annualized effective tax rate to be approximately 9 percent. U.S. GAAP requirements prevent recognizing certain expected tax benefits until the quarter in which they occur. With the realization of anticipated discrete fourth quarter events, we expect that our annual effective tax rate will return to approximately 0 percent for 2005 by year-end.
Cymer’s management will hold a conference call at 2:00 pm (PDT) today, July 19, 2005, to discuss second quarter 2005 results and third quarter 2005 guidance, and to answer questions regarding the formation of the TCZ joint venture announced today. This press release, the conference call and accompanying slides may be accessed on the company’s Web site at www.cymer.com.
Forward Looking Statements
Statements in this press release that are not strictly historical in nature are forward-looking statements. These statements include, but are not limited to statements regarding expectations for the ramp-up of 65nm production, and the statements under the caption “Corporate Outlook” above, including implications regarding the financial impact of the formation of the joint venture with Carl Zeiss SMT, AG. These statements are predictions based on current information and expectations and involve a number of risks and uncertainties. In addition, statements regarding backlog and book-to-bill ratios should not be read as predictions or projections of future performance. Actual events or results may differ materially from those projected in any of such statements due to various factors, including but not limited to: the demand for semiconductors in general, and, in particular, for leading-edge devices with smaller geometries; the timing of customer orders, shipments and acceptances; delays or cancellations by customers of their orders; cyclicality in the market for semiconductor manufacturing equipment; the rate at which semiconductor manufacturers take delivery of photolithography tools from the company’s customers; the performance and market acceptance of the company’s new products or technologies; new and enhanced product offerings by competitors; the company’s ability to meet its production and product development schedules; the company’s ability to secure adequate supplies of critical components for its advanced products; and the company’s ability to manage its expense levels and unanticipated expenses. For a discussion of these and other factors which may cause our actual events or results to differ from those projected, please refer to the company’s most recent annual report on Form 10-K and quarterly reports on Form 10-Q, as well as other subsequent filings with the Securities and Exchange Commission.
About Cymer
Cymer, Inc. is the world’s leading supplier of DUV illumination sources, the essential light source for DUV photolithography systems. DUV lithography is a key enabling technology, which has allowed the semiconductor industry to meet the exacting specifications and manufacturing requirements for volume production of today’s advanced semiconductor chips. Further information on Cymer may be obtained from the Company’s SEC filings, the Internet at www.cymer.com or by contacting the company directly.
| | Three Months Ended June 30 | | Six Months Ended June 30 | |
Cymer, Inc. | | 2004 | | 2005 | | 2004 | | 2005 | |
Total revenues | | $ | 94,907,000 | | $ | 96,392,000 | | $ | 182,828,000 | | $ | 181,202,000 | |
| | | | | | | | | |
Net income | | $ | 10,201,000 | | $ | 11,015,000 | | $ | 17,357,000 | | $ | 16,400,000 | |
Basic earnings per share | | $ | 0.28 | | $ | 0.31 | | $ | 0.47 | | $ | 0.45 | |
Diluted earnings per share | | $ | 0.27 | | $ | 0.30 | | $ | 0.46 | | $ | 0.45 | |
Weighted average common shares outstanding - diluted | | 37,673,000 | | 36,166,000 | | 37,846,000 | | 36,695,000 | |
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CYMER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
| | For the three months | | For the six months | |
| | ended June 30, | | ended June 30, | |
| | 2004 | | 2005 | | 2004 | | 2005 | |
REVENUES: | | | | | | | | | |
Product sales | | $ | 94,722 | | $ | 95,797 | | $ | 182,593 | | $ | 180,406 | |
Other | | 185 | | 595 | | 235 | | 796 | |
Total revenues | | 94,907 | | 96,392 | | 182,828 | | 181,202 | |
| | | | | | | | | |
COST AND EXPENSES: | | | | | | | | | |
Cost of product sales | | 49,975 | | 57,731 | | 102,143 | | 110,762 | |
Research and development | | 14,832 | | 16,937 | | 27,202 | | 31,541 | |
Sales and marketing | | 5,879 | | 6,777 | | 11,702 | | 12,551 | |
General and administrative | | 8,154 | | 6,022 | | 14,769 | | 12,326 | |
Amortization of intangibles | | 40 | | — | | 80 | | 20 | |
| | | | | | | | | |
Total costs and expenses | | 78,880 | | 87,467 | | 155,896 | | 167,200 | |
| | | | | | | | | |
OPERATING INCOME | | 16,027 | | 8,925 | | 26,932 | | 14,002 | |
| | | | | | | | | |
OTHER INCOME (EXPENSE): | | | | | | | | | |
Foreign currency exchange loss - net | | (399 | ) | (573 | ) | (345 | ) | (767 | ) |
Gain on debt extinguishment | | — | | 2,220 | | — | | 2,220 | |
Interest and other income | | 1,603 | | 2,597 | | 3,499 | | 4,998 | |
Interest and other expense | | (2,511 | ) | (1,776 | ) | (5,067 | ) | (3,903 | ) |
| | | | | | | | | |
Total other income (expense) - net | | (1,307 | ) | 2,468 | | (1,913 | ) | 2,548 | |
| | | | | | | | | |
INCOME BEFORE INCOME TAX PROVISION AND MINORITY INTEREST | | 14,720 | | 11,393 | | 25,019 | | 16,550 | |
| | | | | | | | | |
INCOME TAX PROVISION | | 3,386 | | 912 | | 5,754 | | 912 | |
MINORITY INTEREST | | (1,133 | ) | 534 | | (1,908 | ) | 762 | |
| | | | | | | | | |
NET INCOME | | $ | 10,201 | | $ | 11,015 | | $ | 17,357 | | $ | 16,400 | |
| | | | | | | | | |
EARNINGS PER SHARE: | | | | | | | | | |
| | | | | | | | | |
Basic earnings per share | | $ | 0.28 | | $ | 0.31 | | $ | 0.47 | | $ | 0.45 | |
Weighted average common shares outstanding-basic | | 36,735 | | 35,841 | | 36,661 | | 36,360 | |
| | | | | | | | | |
Diluted earnings per share | | $ | 0.27 | | $ | 0.30 | | $ | 0.46 | | $ | 0.45 | |
| | | | | | | | | |
Weighted average common shares outstanding-diluted | | 37,673 | | 36,166 | | 37,846 | | 36,695 | |
| | | | | | | | | | | | | | | | |
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CYMER, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data)
| | December 31, | | June 30, | |
| | 2004 | | 2005 | |
ASSETS | | | | | |
| | | | | |
CURRENT ASSETS: | | | | | |
Cash and cash equivalents | | $ | 114,246 | | $ | 149,049 | |
Short-term investments | | 175,866 | | 134,473 | |
Accounts receivable - net | | 110,680 | | 71,032 | |
Foreign currency forward exchange contracts | | — | | 2,060 | |
Inventories | | 110,022 | | 90,350 | |
Deferred income taxes | | 7,470 | | 7,585 | |
Prepaid expenses and other assets | | 5,726 | | 5,085 | |
| | | | | |
Total current assets | | 524,010 | | 459,634 | |
| | | | | |
PROPERTY AND EQUIPMENT - NET | | 123,548 | | 118,606 | |
LONG TERM INVESTMENTS | | 84,561 | | 58,810 | |
DEFERRED INCOME TAXES | | 67,722 | | 67,134 | |
GOODWILL - NET | | 8,358 | | 8,358 | |
INTANGIBLE ASSETS - NET | | 10,394 | | 9,188 | |
OTHER ASSETS | | 7,185 | | 6,600 | |
| | | | | |
TOTAL ASSETS | | $ | 825,778 | | $ | 728,330 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
| | | | | |
CURRENT LIABILITIES: | | | | | |
Accounts payable | | $ | 13,949 | | $ | 13,590 | |
Accrued warranty and installation | | 28,546 | | 27,712 | |
Accrued payroll and benefits | | 16,284 | | 12,796 | |
Accrued patents, royalties and other fees | | 6,318 | | 6,210 | |
Foreign currency forward exchange contracts | | 1,901 | | — | |
Income taxes payable | | 10,397 | | 10,478 | |
Unearned income | | 6,152 | | 4,428 | |
Accrued and other current liabilities | | 4,456 | | 3,734 | |
| | | | | |
Total current liabilities | | 88,003 | | 78,948 | |
| | | | | |
CONVERTIBLE SUBORDINATED NOTES | | 200,753 | | 140,722 | |
DEFERRED INCOME TAXES | | 6,237 | | 6,237 | |
OTHER LIABILITIES | | 7,282 | | 8,137 | |
| | | | | |
Total liabilities | | 302,275 | | 234,044 | |
| | | | | |
MINORITY INTEREST | | 6,183 | | 5,421 | |
| | | | | |
COMMITMENTS AND CONTINGENCIES | | | | | |
| | | | | |
STOCKHOLDERS’ EQUITY | | | | | |
Preferred stock - authorized 5,000,000 shares; $.001 par value, no shares issued or outstanding | | — | | — | |
Common stock - authorized 100,000,000 shares; $.001 par value , issued and outstanding 36,993,000 and 37,191,000 shares | | 37 | | 37 | |
Additional paid-in capital | | 378,414 | | 382,928 | |
Treasury stock at cost (1,943,000 common shares) | | — | | (50,000 | ) |
Unearned compensation | | (16 | ) | — | |
Accumulated other comprehensive loss | | (4,455 | ) | (3,840 | ) |
Retained earnings | | 143,340 | | 159,740 | |
| | | | | |
Total stockholders’ equity | | 517,320 | | 488,865 | |
| | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 825,778 | | $ | 728,330 | |
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CYMER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
| | For the six months
ended June 30 | |
| | 2004 | | 2005 | |
| | | | | |
OPERATING ACTIVITIES: | | | | | |
Net income | | $ | 17,357 | | $ | 16,400 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
Gain on debt extinguishment | | — | | (2,220 | ) |
Depreciation and amortization | | 13,949 | | 14,440 | |
Non-cash stock based compensation | | 261 | | 360 | |
Amortization of unearned compensation | | 67 | | 16 | |
Minority interest | | 1,908 | | (762 | ) |
Provision for deferred income taxes | | (490 | ) | 46 | |
Loss on disposal or impairment of property and equipment | | 58 | | 35 | |
Change in assets and liabilities: | | | | | |
Accounts receivable - net | | (26,009 | ) | 39,648 | |
Foreign currency forward exchange contracts | | (2,127 | ) | (2,677 | ) |
Inventories | | (17,776 | ) | 19,672 | |
Prepaid expenses and other assets | | (2,126 | ) | (277 | ) |
Accounts payable | | 3,466 | | (359 | ) |
Accrued and other liabilities | | 13,998 | | (5,451 | ) |
Income taxes payable | | 4,290 | | 81 | |
Net cash provided by operating activities | | 6,826 | | 78,952 | |
INVESTING ACTIVITIES: | | | | | |
Acquisition of property and equipment | | (8,140 | ) | (7,849 | ) |
Purchases of investments | | (195,602 | ) | (201,673 | ) |
Proceeds from sold or matured investments | | 189,441 | | 268,200 | |
Acquisition of patents | | (5,990 | ) | — | |
Acquisition of minority interest | | (2,000 | ) | — | |
Net cash provided by (used in) investing activities | | (22,291 | ) | 58,678 | |
FINANCING ACTIVITIES: | | | | | |
Proceeds from issuance of common stock | | 10,410 | | 4,154 | |
Redemption of convertible subordinated notes | | — | | (57,336 | ) |
Payments on capital lease obligations | | (24 | ) | (20 | ) |
Purchase of treasury stock | | — | | (50,000 | ) |
Net cash provided by (used in) financing activities | | 10,386 | | (103,202 | ) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | (1,847 | ) | 375 | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | (6,926 | ) | 34,803 | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD | | 110,632 | | 114,246 | |
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD | | $ | 103,706 | | $ | 149,049 | |
| | | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | |
Interest paid | | $ | 4,482 | | $ | 4,324 | |
Income taxes paid, net | | $ | 2,159 | | $ | 1,569 | |
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